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Halftime Report
Managing a Portfolio as Rates Rise 5/18/26
00:41:10
Scott Wapner and the Investment Committee debate how to manage your portfolio amid a rising rate environment. Plus, the Committee share their latest portfolio moves. And later, we hit some Committee stocks on the move including Regeneron and Delta Air Lines. Investment Committee Disclosures
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- [00:00]
Commercial Narrator
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, Member, SIPC Your data lives everywhere on prem in the cloud, across apps. Bring it all together with Everpure, the platform that acts like a living system, delivering the latest in data, performance, security and innovation without ever slowing you down. Sophisticated enough to anticipate your ever changing data needs, yet simple enough to feel like second nature. Tame your data chaos with Everpure and make storage and data management the simplest part of your business. Visit everpuredata.com to learn more.
- [00:58]
Scott Wapner
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the state of the markets, rates moving higher, Nvidia earnings looming. We discuss and debate with the investment committee. Joining me for the hour, Joe Terranova, Shannon Sokosha, Jason Snipes, Stephen Weiss, let's check the markets here. We do have the major averages under a little bit of pressure today, not all that much. S and P down about a little more than 1/3 of 1%. Dow gives up 50,000 once again, obviously we're watching rates. That's the biggest deal. Oil actually is lower today. The 10 year hitting a high of 463. It's the highest since February of 25. So you're looking at more than a year since we've been there. But the commentary feels like it's changed. I mean, at least in some respects around what rates are doing. Traders now see the Fed moving as a hike. December hike has a 51% probability. January 6th, March 71%. Yardeni's talking about a July hike. Mike Wilson, Morgan Stanley of Bond volume rises. With rising rates on the back end, we would expect a first meaningful correction in equity prices since the markets bottomed in March. Joe, you get the first shot at this. Are rising rates now the biggest risk to an otherwise really good story.
- [02:32]
Joe Terranova
So I think rising rates have you in the ready position to take action on how much you have played offense so far in Q2. If you think about the competition in the headlines in Q2, it was dominated by AI on a daily basis. And I think we, we kind of reached this moment where it was as intense as it ultimately probably could be with cerebus' IPO last week. Now you have competition, Scott, you have competition because as you mentioned, a 10 year treasury is at 4.60. And for the Trump administration, this is their real first significant economic challenge internally within the market, even more than crude oil itself. If you pull back the lens and think about when President Trump was inaugurated on January 21st of 2025, two days later, a 10 year traded 4.66. They've had the benefit of 10 year yields really acting in a very BE capacity. So this is a challenge to the headlines. This is a challenge to the Trump administration. And from a strategic standpoint, first and foremost, it's a challenge to the momentum factor. The momentum factor is the driving force right now in the market. I think that's most at risk.
- [03:45]
Scott Wapner
I mean, Shannon, if this is the pullback that you're getting on a day where rates continue to have that wave higher, I think many people would take that because they would believe that the growth trajectory and the AI story are resilient enough to overcome that. UBS talking about that today. Yeah, we could get some consolidation. It wouldn't be a surprise after we've been up for seven weeks in a row. And they don't expect higher yields to derail the positive outlook because growth has remained resilient. There's so much optimism around the AI story that, you know, if the market was uber concerned with a move higher in rates probably wouldn't look like it. It does today. Now, Joe's coin is fair growth and tech is getting hit a little bit today because as rates go up, obviously there's, those are less favorable positions to be in for a day.
- [04:39]
Stephen Weiss
Yeah, this hasn't necessarily been all that unruly either. I think we've had periods where the rate volatility has been significantly more amplified over the course of the last couple of years. And so if you look at what the bond markets are pricing in, they're really pricing in, in our view, on the long end, this growth scenario, and I think that's a confluence of growth and inflation. And our view is actually on the short end of the curve. You know, we're probably, we believe that it's still a little bit of overreach on the, on the rate story. I think you're talking about derailing. And if this is just a growth story and we expected this concentration, this narrowness in the market to persist. But yet you have a broader story in terms of economic momentum, manufacturing re acceleration. Capex is broadening. 10 out of 11 sectors posting stronger earnings this past quarter. So right now the market has been concentrated from a performance perspective in those areas that have done well from an AI adjacency perspective. The, the reality is though, Scott, is that the underpinnings of economic growth are there. The last thing I would note is that our view is that we don't necessarily need the Fed to be meaningfully more accommodative in the second half of the year. And so we're not pinning this continued economic growth on rate cuts.
- [05:54]
Scott Wapner
No, but I think that conversations change. I think you need to, to, to sort of, I think investors need to change that thought process and say yeah, we don't need cuts, but what if we have to deal with hikes? Like the conversation I feel on Fed on policy has, has shifted enough that that needs to be the debate. In other words, Ed Yardeni, who's been one of the biggest bulls on Wall street, right, 80 to 50 is his target for year end. He stays with that today, but calls for a July hike that is a complete change of pace that even some of the most uber bullish strategists on the street say, yeah, the Fed could actually hike in July. Now I don't think the market believes it for a minute that the wash led Fed is going to, going to do that. Could only imagine the missives that would come from the White House if that was even seriously entertained by the incoming and new Fed chair. But I don't think the market buys that for a second.
- [06:47]
Stephen Weiss
No, and our view is that they, they, they shouldn't. We're, we're, we disagree with that here. We don't think that the Fed is going to hike rates in July and we don't think it because there just isn't the transmission to core CPI from higher energy prices that we would anticipate. Consumer spending is likely to slow incrementally from that discretionary wallet being cut into by high energy prices. And Scott, we, we aren't really seeing a robust level of wage growth. I mean wage growth is moderating. So you know, that sort of speaks to still not a maximum employment situation, which gives the Fed time to wait and see, which is our view.
- [07:20]
Scott Wapner
How do you see this year? We, you know, we hit a new highs numerous times last week. We ended with a whimper as rates went up and oil was up and the market was ripe for something anyway because the market had gotten so top heavy and so narrow that all it took was just a little inch of concern and all of a sudden you had a reasonable sell off on Friday. Again, nothing of great magnitude. And here we find ourselves, rates are up, market's not down all that much. Tech is obviously getting hit. The NASDAQ is worse than the others. But even so, it's not that big of a deal.
- [07:52]
Jason Snipes
It isn't, it isn't. But I think what is, what still is concerning to me is about the breath in the market. Only 44% of stocks are still trading above their 50 day. You talk about the narrowness. I think that is, that's an increasing concern as that story continues to evolve over the next couple of weeks. I think as we turn back the clock to last week, however, you know, yes, a lot of the inflationary numbers were kind of priced in, but there was a double on PPI on core CPI that was warmer than expected. So those are definitely concerns for me going forward. Yes, yields are moving up across the curve. Oil is down a little bit today. Nothing substantive coming out of China this past weekend. You know, so I think there's a, there's a couple of things in the crock pot that are pulling the market down slightly. But to your point, it's nothing substantial. So I think the earnings story has been good. We'll hear from retail this week, which I think will continue to move it effort.
- [08:43]
Scott Wapner
I mean, Weiss, as I was saying, so S p is up 10%. You know, they're about your, your date. Tech accounts for 85% of that. Okay. The S P excluding tech returned just 3%. So that, that speaks to the, the narrowness. Like look, until we see a rate hike, I don't think anybody believes like you can write about it and you can talk about it, but I'm not sure that we really believe that the Fed's next move is going to be a hike. And if that does happen, the market's not going to look like it does. It's not going to be hanging around the hoop of record highs if you get a hike in rates. Right. Period.
- [09:20]
Shannon Sokosha
The bond market's telling you that or the bond market is hiking itself. So if the Fed comes in, it's just the Fed rubber stamping what the market's already telling you. And if you take a look the correlation, there's always some correlation, some degree of correlation between rates and equities. Right. An inverse correlation. But if you take a look last three months and the last month, you'd see over the last month. That correlation is one to one. And that's troubling part. So I think we're at a lull in oil prices right now, meaning that I think they go higher as long as we keep with the blockade. So when you look at the situation that's there, there are two options that Trump has. One, and he's threatened this. I don't know that he'll actually do it, which is that renew hostilities that won't be good for oil prices. And the other is maintain the blockade that won't be good for oil prices. And of course, third option is that, that he finds a way to hit the off ramp with a dialogue that his base will believe and that's always an option.
- [10:26]
Scott Wapner
But overall it's not that his base, it's not that the. Forget the base. It's the markets at this point. Well, as you, as you, as you get closer to the midterms, you had to believe that, that the President's going to do and say whatever he thinks he has to do and say.
- [10:41]
Shannon Sokosha
Right.
- [10:42]
Scott Wapner
To keep the market from having any kind of dramatic move lower. I mean, we've how many times we need to see the movie to understand what the plot is.
- [10:49]
Jason Snipes
Right.
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Shannon Sokosha
Except. Except here's the difference. I think at this point the bond vigilantes, which include focus on the deficit, Deficits can be 1.9 trillion this year versus 1.7 trillion was already record. So all that's conspiring to drive up rates. So I don't think there's an off ramp for rates. So I wouldn't be surprised to see a 5 to 10% correction. As you recall from show on Wednesday, I put on some hedges. I've been lightening up some positions. I think that with Paul Tudor Jones starting the dialogue that we're a year or two away from this ending actually brings forward the ending because nobody wants to be the last one out. So I think that's what we're seeing, the AI trade now. So I have concerns now. It could all turn on a dime. Of course, that's why you can't be short. So hedging is different than being short.
- [11:40]
Scott Wapner
Nobody likes to be in the midst of what a 5% correction feels like in the moment. But this is one of those markets where you have a 5% pullback. Everybody's like, oh, that kind of feels kind of nasty. And then at the end of the 5%, everybody's like, oh, phew, was waiting for something like that because the market was right before it. You were getting into unhealthy places where everything was like up and to the right.
- [12:02]
Shannon Sokosha
Can I just add one thing though? 5% percent. That's the market. There's going to be a much bigger Correction in the AI trade so it's going to keep to 5, 10% because the equal weight just hasn't moved as much. So that's going to be the ballast for keeping the overall indices from going down further.
- [12:19]
Joe Terranova
Look, I think you're leaning forward in your chair. I said at the top. You're standing ready. You're aware of what's going on in the bond market. You're not taking action yet. Congratulations that you sold some stuff last week. Maybe I wish that I did, but I didn't do anything. I bought more Apple on Wednesday. So I'm still sitting with the center of my personal portfolio directly allocated towards the AI and the momentum story. But I'm aware, I'm understanding if yields continue to move higher, one of two things are going to happen. You're going to get your 5 to 10% correction or what I think is going to happen is the market is going to do what it's done all year, which is it's going to rotate, it's going to rotate into other areas of the market. Now there hasn't been sustainability in that rotation but I think there's enough good earnings growth in 2026 and enough good in the economy itself that we could afford ourselves that we will not have a significant correction and the market will find other places for capital to move away from AI.
- [13:16]
Scott Wapner
By the way, you know, earnings estimates are going up still in large part because of tech like B of A. They raised their earnings forecast. They were at 310 bucks there at 335. Why? Strength in commodities in part. And TMT tech, media and telecom.
- [13:34]
Stephen Weiss
Yeah, they're going up and margins are continuing to look ever more attractive. And in those other sectors, Scott, I mean if you take out technology and you take out energy, you know, you have kind of a. But you still have a reasonable basis. You look at consumers discretionary and financials, for instance, those are still double digit earnings growth for this year. I mean we're like, we're, you know, it's so it's not 50% but it could be 20%. And so you know, to your point, I just don't know how you can get if we got that 5 to 10% pullback that Weiss is talking about, I don't know how you cannot remain constructive because at that point I think not only would people buy some of this memory, CPUs, analogs they don't own already but they're also going to see some benefit to the defensive stuff that they've held onto. So why. I just don't know that that creates a, a contagion where people want to move out of equity. I actually think it's an opening.
- [14:25]
Scott Wapner
I don't think that that's, that rates are necessarily going to, are the thing that, that are going to up is going to upend the bull market. A change in the AI story certainly would but you know, rates moving a bit higher, I don't think that in and of itself is enough to wreck the bull market, do you?
- [14:43]
Jason Snipes
No, I definitely don't. I think to Shannon's point I think the AI infrastructure story has just only expanded to, to include other pieces like it was always kind of the Nvidia story and then we kind of moved into memory, we moved into other places in that, in that market, the custom silicone, the TPUs Marvell and obviously the Google chips. So there's a story that is significant and I think it is to Paul Tudor Jones perspective. I think it is a multi year story and I think the opportunity for any type of sell off will be immediately bought because I think there's failure.
- [15:16]
Scott Wapner
Well, we're going to get a good pulse check if you want to call it that or a reminder of where we are and why we're here and why people remain so bullish. Wednesday Nvidia reports As we know, Dan Ives says it's going to be a golden moment for the tech space. 3 price target rises today 285@ Morgan Stanley, 300@ KeyBank, 300matched@ DA Davidson as well. What do you think about this?
- [15:42]
Joe Terranova
So we're talking about 80 billion in revenue with whisper numbers approaching 90 billion in revenue. And I think the interesting thing about this report is Nvidia's ability to step forward and say supply chain disruptions that others are feeling. No, we don't feel those constraints and I think that's very powerful. I think the 212 area for this stock is critically important. Let's remember it spent six months basically trading in a sideways range on October 29th. 212. That was the high. So that should now be important support. I don't think you could look at China and think that they are going to be a factor as we move forward which was the expectation when the President went over to Beijing. But I think look the, the anticipation is this is going to be a blockbuster report. I think that's Built into the stock price for sure. I think it's reflected in what we're seeing with Broadcom, which reports on June 3rd as well.
- [16:36]
Stephen Weiss
Maybe not a factor for China in the short term.
- [16:38]
Joe Terranova
No, I think the expectation was, is that you would get some relief on the chips.
- [16:43]
Scott Wapner
Okay, I'm sorry.
- [16:45]
Joe Terranova
Go ahead and get the revenue contribution that's been missing over the last six months.
- [16:49]
Scott Wapner
I was going to say Broadcom's target to 490 today at UBS. You have Nvidia to look. I don't know what they can possibly say that's going to be a surprise to anybody. Yeah, it's likely going to be a bullish outlook. I mean the hyperscalers already sort of gave you the roadmap for what this company is going to continue to deliver. I mean, I know that whatever whisper numbers are, the bar continues to be raised, but they continue to at least meet it or get over whatever they have to get over. Not that the stock's going to have a tremendous move on the backside of it because it hasn't really done that. It's taken a little bit to digest it. And then it has this ramp. I don't know what this time holds. How do you feel about it going?
- [17:33]
Jason Snipes
I think it's going to be about the forward guidance, without a doubt. Right. And I think it's also going to be about margins. We need margins to stay in that kind of 70% ratio.
- [17:43]
Scott Wapner
Right.
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Jason Snipes
I think this, this kind of transition. I think the black rail ramp calls are something that's been in the news. Right. Transitioning from selling individual GPUs to the server ratchers require more labor and more complexity. I think that is something to be looked at, but it's going to be a block rash. Recorder. We've already heard from all the hyperscalers in terms of capex. So, you know, no news there, but I think it'll be a solid. But that's where my focus is, the forward guidance and the margins.
- [18:09]
Scott Wapner
Okay. So we'll, we'll wait for that on Wednesday and we'll see what happens. Why she made a move in terms of mega caps. And by the way, we, we are just off the back of 13F season, which I always tell everybody, just take it with a grain of salt because the most nimble of traders are who they are because of how they trade. And you know what? Appaloosa Trademark doubling an Amazon stake revealed in a 13F and adding SanDisk in the first quarter. Who knows what's the case actually today. But nonetheless, the smartest money on the street sees what everybody else sees. Okay, these are the places to be. Berkshire triples its Alphabet stake, Sondheim's D1 capital. They added to Amazon, Nvidia, Broadcom and they exited Meta. You trim Meta. Take. Take me through that.
- [18:58]
Jason Snipes
Yeah.
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Shannon Sokosha
So if you recall, when met a trade down not far from this level, I added to my position what was already core position. I entered a trading position that did not work out and so the position was much too large. I lost money on the trading position so I want to right size the position. I don't think there's a lot of risk in the name but I also don't think there's a ton of upside. You have to wait till next quarter and hopefully they won't again increase their capex and that the numbers will continue to come through in earnings and revenue
- [19:30]
Scott Wapner
as they have Morgan Stanley Overweight reiterated 775 is the price target. They update their model for an expected 10% workforce reduction, slower hiring and higher CAPEX. Product innovation is their key thesis.
- [19:45]
Shannon Sokosha
Yeah, and I think that's all true. It's all likely. So it's still a core position but again it's not an oversized position. Makes me uncomfortable. I went into the trade believing that it would pop near term. Candidly I stayed way too long and lost money on that trade. Not a lot, but you don't go into trades to lose money. So instead of sitting here and hoping, given my market views, I just didn't think it made any sense.
- [20:11]
Scott Wapner
So as we wait for Nvidia, you know, maybe the key to the near term direction, Shan hinges on the semis at large. Not so much Nvidia, but a lot of these other names that have gone straight up into the right and that, you know, look to some as though they may have cracked late last week. Like Jonathan Krinsky. He points that they had their worst day since March down almost 4%. You had some pockets of rotation maybe into the software, but breath was poor. What's your take? He says there are too many signals now to ignore of what's been happening in the semi space as those stocks all kind of look the same. Micron gets a lot of the conversation, but everything kind of looks the same.
- [20:54]
Stephen Weiss
Yeah, there is. This is similar to what we saw in February with, you know, the disintermediation story around software, except it's all been positive. Essentially anything involved from a hardware perspective, components, anything involved in AI agentic and inference really has run in the last seven to eight weeks. And our view is that There has been a massive underinvestment in this part of the AI ecosystem. But admittedly it does feel like this is pulling forward a little bit of demand, at least over the course of the last few weeks or so. So. But to my point, Scott, I think there's also going to be some differentiation or dispersion in this group if we do get that pressure downwards and that catch down. And I don't actually disagree with Krinsky here, you could see the whole group under some pressure with this froth, but then there's likely to be some winners and losers out of this group, the same way we've seen in other parts of the AI ecosystem. And so I think this is an opportunity for a breather, perhaps for some managers, especially active equity managers, who haven't had this exposure to potentially pick off if we do get some weakness. So I agree with Jason. I think this would be a buying opportunity.
- [21:56]
Scott Wapner
Weiss, why'd you trim Micron? I mean, we know the stock's been up, so it's kind of a. Yeah, sounds like a dumb question, but there still feels like there's a lot of momentum behind these trades and names like that.
- [22:07]
Shannon Sokosha
Yeah. So as you call, I trimmed 10% last week and this morning I sold the pre market most of what I sold. It was looking up 30, 35. I didn't catch that top tick, but I came pretty damn close to it. I've heard this story and seen this movie many times before, and it may play out longer, but it's a yada, yada, yada story, which means that it looks very cheap next year. And actually at 800 didn't look so cheap last year because the average peak multiple is like six times, just like
- [22:37]
Scott Wapner
eight and a half, I think, or somewhere in the ballpark of that now.
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Shannon Sokosha
Exactly.
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Jason Snipes
Right.
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Shannon Sokosha
Which is not cheap.
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Scott Wapner
Right.
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Shannon Sokosha
It's reasonable, but it's not cheap. And I just thought with all the money that went into it, I was struggling to see how the story could improve. And I thought that it could be a source of funds for some. But for me, it became such a large position in a month and a half that it just didn't pay to hold on to something that was an irresponsibly large part of my portfolio.
- [23:03]
Scott Wapner
Multiples come in just a touch too, in the between Friday and today. It's seven, a little more than seven times now. Interesting.
- [23:10]
Shannon Sokosha
If you recall one more thing you call when I went into it said I'm going to ride momentum as long as I can when that momentum starts to die. I'm going to start hitting the exit now. I'm not going to exit the whole position because I do think that if it trades down a little bit to Shannon's point before, it'd be a point where I'd want to enter. So I'll tolerate the volatility. I'm not saying I won't sell anymore, but I don't see myself exiting the position.
- [23:31]
Scott Wapner
There was a moment on that chart where it looked for a minute like momentum may have run out on this name and then it was going to have, you know, maybe a deeper pullback. It's like, I don't know if it was in April.
- [23:44]
Shannon Sokosha
Yeah, it's when I bought it April 30, it was at 350.
- [23:48]
Scott Wapner
Well, you could see. So it comes down right after it has the ramp. Right. It comes down a touch and then it just goes right back up.
- [23:54]
Shannon Sokosha
Yeah.
- [23:55]
Scott Wapner
So Lucky Melius today raises targets across the board that they're going to continue to take share from Software and the Mag 7. So they take Micron to 1100. They take Marvell to 220. They take Qualcomm to 220. And they take AMD to 540, Jase.
- [24:17]
Jason Snipes
Yeah, so, I mean, for me, Qualcomm has obviously been in the name and it hasn't traded well up until the last several weeks. Right. And I think we were talking about this a couple weeks ago on the show. You know, their report wasn't phenomenal. I think my story with them is they have been. Other divisions of the business have been doing better. So IoT auto, auto business was up plus 30. And there was kind of just talk about delivery to a hyperscaler. But the stock has run a ton in the last month. So for me, I thought it was a little bit prudent to kind of take some off. I haven't done that yet, but I understand kind of the price run up and also the upgrades that we've seen given kind of the story on a going forward basis.
- [24:58]
Scott Wapner
Software looks actually pretty good today. By the way, if you look at a lot of these names now, it's up. The IGV's up 23% off the April 10th low. So, you know, maybe you got some money, Joe, coming out of some of the semiconductors and trying to ride a little momentum in software like Palo Alto, which hit a record high today.
- [25:18]
Joe Terranova
It's the cyber names, it's Crowdstrike, it's
- [25:21]
Scott Wapner
Fortinet, it's Palo Alto Salesforce, ServiceNow, Snowflake, IBM is is up today.
- [25:28]
Joe Terranova
Yeah. I'd focus on the cyber names though because that's where you're actually seeing some 52 week highs and to your point, all time highs being made. It's crowdstrike, it's fortinet, it's hollow alto. I think the money's being recaptured there. The fundamental story that people have aligned themselves with over the last several years, they're coming back to that and believing that there's validity in that story. So that's the one segment of the software industry that I would trust more than others. There's names like Zoom Communication that has the relationship with anthropic. I like that. But I'm not ready to say universally. I think the all clear is unfolded for the entirety of the software industry. You have to be very specific in bottoms up.
- [26:07]
Scott Wapner
Okay, mining for up to quick break. We come back, we got some committee stocks on the move today. Berkshire into a new name. We'll tell you which one and why. UnitedHealth on the move. And how about housing stocks rates up, mortgage rates up. That's like it can't be good for housing. We'll discuss next.
- [26:22]
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- [26:50]
Scott Wapner
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Jason Snipes
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Scott Wapner
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- [27:46]
Scott Wapner
all right, let's get some stocks on the move. We're going to start today. Regeneron is lower. At least it was after its skin cancer treatment missed a late stage trial goal. Stock off near 10% got downgraded today to Joe targets, a 700. It was 900. So there was a lot of optimism around this phase three.
- [28:06]
Joe Terranova
I like that you said that, a lot of optimism. Look, we own it in the ETF. We bought it in January at 7:41. We're down on it right now. Momentum has been neutralized for sure. It's broken below the 200 day moving average at 6 91. A lot of optimism. 12 month price target on this stock with a 70% analyst overall suggested buy rating 8 46. So there still remains a tremendous amount of optimism. I don't think you're rushing into this name right now. You have to let this play out out and work off some of that bullish sentiment.
- [28:40]
Scott Wapner
Okay. Berkshire, so they're back in airlines at least. You know, maybe a toe.
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Joe Terranova
They're in the one that matters.
- [28:46]
Jason Snipes
Yeah.
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Scott Wapner
A two and a half billion dollar stake in Delta Airlines Now. It's their 14th largest holding as of the end of March. That's according to the filings. Again, as, as we told you, you got to take everything with a bit of a grain of salt. But nonetheless it's not the kind of ship that turns quickly over there. So.
- [29:03]
Joe Terranova
No, but, but I like look, this is to me obviously it's the premier airline, United Airlines running a close second on both of those names. CEO Greg Abel obviously is putting his fingerprints on the portfolio. Exiting names like Visa, MasterCard, selling down the stake in Chevron and pivoting a little bit more towards technology with the purchase of Alphabet. But I like what's going on here with Delta end. It looks really good from a momentum perspective and also in the face of rising oil prices.
- [29:32]
Scott Wapner
Okay. CEO Ed Bastin is going to be on power lunch today, 2:30. So don't miss that. He's always fun to listen to. United Health is lower so Berkshire cuts his position there. Weiss, you own this name?
- [29:44]
Shannon Sokosha
Yeah, look it's, I would say that it's gone perhaps farther than it should have in this period of time. Keeping in mind that it was down at the bottom for a long time below 300. I'm still there. I haven't cut any of it. And it's going to grow into the increased multiple that it has. I think the business is generally in pretty good shape Hemsley has done a great job turning it around and I think that turnaround will continue. Keep in mind that they did get a rate increase, not a great one in, in the new Medicare plan but, but I'm staying with it right now. I think it's somewhat of a defensive holding.
- [30:23]
Scott Wapner
Okay.
- [30:24]
Shannon Sokosha
I expect to be volatile but I'm sticking with it.
- [30:26]
Scott Wapner
Let's look at the ITB that is the home construction etf. So it's up a little bit but it's obviously been in a, in a downtrend as you see on rates moving up. I'd like you to make the case Jason Snipe, since you own Dr. Horton. Yep. To our viewers. What I mean, go ahead. I want him to make the case to own a housing stock.
- [30:51]
Jason Snipes
Yeah.
- [30:52]
Scott Wapner
Right now.
- [30:53]
Jason Snipes
So for D, for dhi, I'm long term bullish on affordable homes. Right. Obviously we were Talking about the 10 year earlier which is a proxy for mortgage rates and 30 years above six and a half. But for me with stocks like this, yes. They've kind of given away some incentives with home purchases and we're talking about Fed policy on a go forward basis. I think eventually. These are the names you want to own and you want to own it before the move happens. Right. So even in a kind of a mixed backdrop, the stock is only down 4%. So that's kind of my narrative on it.
- [31:27]
Joe Terranova
That laugh was a sigh of relief that you were not coming to me. We own pulte homes. I can't make the case. Tomorrow morning Home Depot is going to report as I'm speaking. Can we show a 52 week chart of Home Depot? Is there a better read on where the housing market is than what Home Depot has done over the last 52 weeks?
- [31:47]
Scott Wapner
Jason says you want to, you want it got to be in these names before the move.
- [31:51]
Joe Terranova
I'm just not.
- [31:51]
Scott Wapner
It's like going out and buying a Raiders jersey now. Yeah, you got to buy it now.
- [31:55]
Joe Terranova
This is, this is the moment Now Jay, I hope you're right for the benefit of the country and for stocks like Home Depot and the home Builders to rally. I just don't see it in front of us, especially with what the 10 year is doing right now and Steve's opening remarks where he feels as though the bond market is dictating everything.
- [32:15]
Shannon Sokosha
And keep in mind new home first time buyers, the age is now 40, up from 30, up from 24, whatever it was. So Jay was very smart in his comments not to give us a timeframe in terms of how far inventory is
- [32:29]
Stephen Weiss
up significantly and to the point. This is just, it's, it's, we've been waiting for supplies, supplies here.
- [32:35]
Scott Wapner
Patience is his virtue, certainly one of them.
- [32:38]
Joe Terranova
He's a Giants fan.
- [32:39]
Domino / Dom Chu
That's right.
- [32:40]
Scott Wapner
Angelica Peebles has a has our CNBC news update. Hi there.
- [32:43]
Angelica Peebles
Hey, Scott. The Treasury Department has agreed to a $275 million settlement with India's Adani Enterprises over 32 apparent violations of US sanctions on Iran. The company, run by Indian billionaire Ghatan Adani, bought liquefied petroleum gas shipments from a Dubai based trader, but the shipments actually came from Iran. That's according to the Treasury. The Justice Department is also dismissing separate criminal fraud charges against Adani. According to court documents viewed by cnbc, Louisiana Senator Bill Cassidy failed to advance in the Republican primary this weekend. His loss is a victory for President Trump as Cassidy is one of the senators who voted to remove Trump. Trump from office after the January six attack at the Capitol. The race will now head to a June runoff between Trump backed Julia Letlow and State Treasurer John Fleming. And Pope Leo will address the rise of AI in his first in depth text outlining his concerns. The pope will present the document known as an encyclical on May 25, joined by anthropic co founder Chris Ola. The text will address the protection of the human person in the in the age of AI, according to a Vatican statement. That'll be definitely an interesting one, guys. Scott, back over to you.
- [33:54]
Scott Wapner
Angelica, thanks so much. Angelica Peebles. Up next, ETF Edge, Don Chu, tell us what's coming up. Domino.
- [33:59]
Domino / Dom Chu
All right, so Scott, the inflation outlook has shifted and that's changed the big picture backdrop for all kinds of assets out there. But should your market playbook be any different because of it? We'll ask one ETF manager about the trends and opportunities that are presenting themselves. That's coming up for ETF Edge on the Halftime Report. Keep it right here.
- [34:18]
Shannon Sokosha
Beth and Rip are back in a new series, Dutton Ranch, streaming on Paramount. Plus, Kelly Reilly and Cole Hower return. And this time they're taking on Texas
- [34:27]
Scott Wapner
as Beth and Rip begin to build a life together.
- [34:29]
Shannon Sokosha
Peace will have to wait as they face corruption, danger and a ruthless rival
- [34:34]
Scott Wapner
ranch willing to protect its secrets at all costs. Legacy is a beautiful thing, but only if it survives.
- [34:41]
Shannon Sokosha
Dutton Ranch, starring Cole Hauser, Kelly Reilly, Annette Bening and Ed Harris, now streaming on Paramount.
- [34:47]
Joe Terranova
Plus, when I lost my sight, I
- [34:51]
John Davi
had to answer some big questions like what would you like the power to do?
- [34:55]
Joe Terranova
My answers helped me discover blind soccer.
- [34:57]
Scott Wapner
And now I get to share it with the next generation bank of America champions, blind soccer player and coach Antoine Cross Craig.
- [35:07]
Stephen Weiss
And everyone who dares to ask, what
- [35:09]
Scott Wapner
would you like the power to do? Bank of America proud to be the official bank of FIFA World Cup 2026 bank of America NA member FDSE when
- [35:18]
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- [35:49]
Domino / Dom Chu
Welcome back to ETF Edge on the halftime report. The 10 year treasury yield is hitting a 15 month high on inflation fears just as the Fed gets a new chairman in Kevin Warsh. But our investors still underestimating underlying economic problems. And can you get ahead of those issues? Joining me now for this conversation is John Davi, CIO at Astoria Portfolio Advisors. I wonder, John, if you can tell us just what you are seeing with regard to investor response to this kind of looming inflationary threat, just how seriously should we take it?
- [36:19]
John Davi
Well, I think you should. I mean if you look at the 10 year JGBs, you know, they're up 20 basis points over the last week. That's a three sigma move. So between JGBS and you just mentioned the US 10 year which just crossed, you know, four point, I mean there's a very significant repricing of rates going on. Couple that with inflation expectations which are now at four year highs. So when we build portfolios at Astoria, we own the hyperscalers because we think that you've got to own them. They've got moats, they have tremendous earnings growth. But we think incrementally on the margin you want to be owning real assets. So our Firm has an ETF ticker PPI. We launch it in 2021. And since 2021, our fund has actually produced good inflation adjusted returns and we've outperformed the S&P 500 by 25%. So we own the energy stocks within that ETF, the cyclicals, industrials, materials. So I just think right now on the margin you've had four or five years of strong inflation and these natural resource stocks, some of them have been the leaders. If you look at what's actually working over the past five years. So the hyperscalers get a lot of attention. But incrementally on the margin we think you should be owning the real assets. And that's what we're doing for our advisors.
- [37:36]
Domino / Dom Chu
And John, really quickly, just a few moments left here. At what point does the 10 year yield become attractive to you?
- [37:43]
John Davi
Well, right now there's about negative 80% correlation between the 10 year versus stocks. So once we cross past 4.5%, stocks tend to wobble and we store that late last week. So I think incrementally on the margin you got to get much lower, maybe like 4.4, 4.35. That's a very short term tactical thing. But inflation isn't going down to 2% anytime soon. You have rate hikes that are being priced in. So I would start to incrementally on the margin start looking at some of these real asset sectors and themes.
- [38:16]
Domino / Dom Chu
All right, John Davia, Astoria, thank you very much for that. We're going to continue this conversation over at etfedge.cnbc.com, john's going to be joined by Joanne Bianco, senior investment strategist over at Bond Blocks. We're going to talk about the inflation story vis a vis opportunity. Scott, I'll send things back over to you.
- [38:31]
Scott Wapner
All right, Domino. Thank you. Dom Chew. Coming up, we got some calls of the day. Got one good one on Netflix, Uber and more. So calls the day. We got one on Netflix. B of A says it's going up 40% from here. 40%. Jason Snipe, what do you think?
- [38:53]
Jason Snipes
So I continue to like Netflix obviously had a nice bump since kind of that that Warner Brothers breakup fee that that didn't go down. Stock has languished since then. They got an initial pop. It has language since then. You know I think it's, it's a can focus on the core business which I like on a going forward basis. Advertising revenue is supposed to be a double this year and 3 billion in run rate for 2026. So I, I like this stock.
- [39:19]
Scott Wapner
Going forward you think realistic 125 at B of A from here?
- [39:23]
Jason Snipes
I think it is possible. I think it is possible. Absolutely.
- [39:25]
Scott Wapner
What do you think Weiss?
- [39:26]
Shannon Sokosha
Yeah, I don't disagree. As you recall I sold part of the position I guess about 85, 86 about a month ago and I kept the rest. I think it'll work. But this has typically been a quarter to quarter show me stock. So waits for the quarters to have the big moves so we need a big quarter coming up to get it out of the funk that it's been in for the last two quarters. So I'm sticking with what I have so far because I think in a down market this has already seen its down market.
- [39:55]
Joe Terranova
It'll act well 88 in the quarter May 6th. That was my re entry point. I agree with both of the gentleman's remarks. I think it was a clearing event. Do you agree with me also walking away for from Warner Brothers.
- [40:07]
Scott Wapner
But what's interesting, you noticed the distinction that he was talking about Mr. Snipe and myself and I felt a duty
- [40:13]
Shannon Sokosha
to call it out.
- [40:13]
Stephen Weiss
I thought he was talking about me. So.
- [40:15]
Joe Terranova
So the ad revenue that Jason highlights is. Is important because I think that number grows even more as they get more active in the live engagement. If you take an NFL game, an NFL game brings in about 25 to 30 million. Their ad revenue on that NFL game is somewhere around 100 to 125 million. If they're able to grow the live engagement ad revenue is going to go up. Well they're doing it.
- [40:38]
Shannon Sokosha
I mean I watched the even more
- [40:39]
Joe Terranova
than they are now.
- [40:40]
Shannon Sokosha
I watched the major Rusi event all 17 seconds of that match.
- [40:45]
Scott Wapner
It's Rousey but that's okay.
- [40:46]
Shannon Sokosha
Rousey. Rousey.
- [40:47]
Joe Terranova
I was wondering
- [40:52]
Stephen Weiss
was the first round that.
- [40:53]
Shannon Sokosha
Yeah and and the ads were unbelievable.
- [40:56]
Scott Wapner
For all he's really hip off camera. He wastes it all before he gets on camera.
- [41:04]
Shannon Sokosha
Sorry Scott.
- [41:05]
Joe Terranova
I don't hang out if you've ever as much as you ever heard of Kevin Hart.
- [41:09]
Scott Wapner
If you're going to mention that you watched the fight it's like would you watch Sugar Ray Leonardo?
- [41:15]
Shannon Sokosha
I mean no, I was watching a closed captions.
- [41:19]
Scott Wapner
All right can we talk Uber real quick before you embarrass yourself further? It was named a top picket deutsche
- [41:26]
Joe Terranova
offer earnings you have this personal disappointed I bought it after earnings bought it at 78 full disclosure. So I'm down on this. I bought it because of the strength of the balance sheet the free cash flow generation but there has not been the subsequent earnings reaction in price that I anticipated.
- [41:44]
Shannon Sokosha
I sold Uber a while ago.
- [41:47]
Scott Wapner
Mike Santoli, we know his name. He's NASA senior markets commentator Michael Santoli. There he is also the overtime co anchor with his midday word which is what today does it center around rates and.
- [42:01]
Shannon Sokosha
And.
- [42:01]
Scott Wapner
And oil or. Or what?
- [42:03]
Mike Santoli
No, I think rates and oil Scott are definitely important parts of the setup for this week and I think it's kind of forcing the question. You guys have been grappling with, I think, is really the obvious one, which is how an unbalanced market that's been so dominated both in price momentum and in earnings forecast revisions by one theme, how that can cool off and maybe come back into alignment, or can it without a little more broad pain? The S&P 500 is almost 2% off its intraday high. It's really no big deal. Semi's down a couple of percent, down 7% in a couple of days. I think in that context, the dispersion machine is working pretty well and keeping things together. But I think that's only because rates haven't done anything really incremental today, and it's not really forcing the hand on some of the cyclical groups. So I think that is the general. The general setup here. I know people are trying to find multiple ways to kind of display exactly how narrow and extreme some of the moves here are in semis. And I think it's very telling that they bought with both both hands semis. This morning they were all up on the open and it got immediately smacked down. So it's kind of erratic and yet it's kind of washing out as a very gentle day because other stuff for now is catching that bid in that legendary broadening trade, which I always think is to be careful what you wish for.
- [43:21]
Scott Wapner
Yeah. All right, I'll see you in a little bit, Mike. Thank you, Mike Santoli. We'll take a break. We'll come back with finals on the other side.
- [43:28]
Shannon Sokosha
All right.
- [43:28]
Scott Wapner
I told you Ed Yard. Denny was sticking with his target today on the S and P for more than 8,200. However, he's calling for a July rate cut. You'll hear from him directly on closing Bell Mirror. Pandit, Stephanie Link, Jonathan Krinsky and the venture capitalist Rashawn Williams will be on set with us, too. I look forward to that conversation with everybody. Mr. Weiss. Steven Weiss. What do you got? Stefan Weiss. What's your final trade?
- [43:56]
Shannon Sokosha
Well, opener. I've got baba. I still baba. Sold off after the earnings that were great. Had a major move. I think it's going to rally again.
- [44:04]
Scott Wapner
Okay. That's just nice.
- [44:06]
Jason Snipes
ServiceNow agentic AI will be a catalyst for the sassy.
- [44:09]
Scott Wapner
Nice day for that stock.
- [44:10]
Stephen Weiss
Shannon Global industrial recovery materials.
- [44:12]
Joe Terranova
Archer Daniels Midland.
- [44:13]
Scott Wapner
All right, I'll see you at 3. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live. Weekdays at 12 Eastern only on CNBC.
- [44:27]
Commercial Narrator
All opinions expressed by the halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer Lots of
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Joe Terranova
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Scott Wapner
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Joe Terranova
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Joe Terranova
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